Correlation Between Perdana Karya and Resource Alam

Can any of the company-specific risk be diversified away by investing in both Perdana Karya and Resource Alam at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Perdana Karya and Resource Alam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perdana Karya Perkasa and Resource Alam Indonesia, you can compare the effects of market volatilities on Perdana Karya and Resource Alam and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Perdana Karya with a short position of Resource Alam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perdana Karya and Resource Alam.

Diversification Opportunities for Perdana Karya and Resource Alam

0.53

Correlation Coefficient

Perdana Karya  Resource Alam

Very weak diversification

The 3 months correlation between Perdana and Resource is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Perdana Karya Perkasa and Resource Alam Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Alam Indonesia and Perdana Karya is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Perdana Karya Perkasa are associated (or correlated) with Resource Alam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Alam Indonesia has no effect on the direction of Perdana Karya i.e., Perdana Karya and Resource Alam go up and down completely randomly.

Pair Corralation between Perdana Karya and Resource Alam

Assuming the 90 days trading horizon Perdana Karya Perkasa is expected to generate 0.79 times more return on investment than Resource Alam. However, Perdana Karya Perkasa is 1.27 times less risky than Resource Alam. It trades about -0.12 of its potential returns per unit of risk. Resource Alam Indonesia is currently generating about -0.18 per unit of risk. If you would invest  79,500  in Perdana Karya Perkasa on December 2, 2024 and sell it today you would lose (10,000) from holding Perdana Karya Perkasa or give up 12.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Perdana Karya Perkasa  vs.  Resource Alam Indonesia

Perdana Karya Perkasa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perdana Karya Perkasa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Resource Alam Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resource Alam Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Perdana Karya and Resource Alam

The main advantage of trading using opposite Perdana Karya and Resource Alam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perdana Karya position performs unexpectedly, Resource Alam can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Resource Alam will offset losses from the drop in Resource Alam's long position.

The idea behind Perdana Karya Perkasa and Resource Alam Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.